SolarEdge downgraded to Underperform from Market Perform at BMO Capital

BMO Capital downgraded SolarEdge (SEDG) to Underperform from Market Perform with a price target of $15, up from $13. The company’s Q4 update suggests it can retire the $347.5M September convert maturity with existing liquidity, which drove a 16% rally in the shares, the analyst tells investors in a research note. However, BMO looks past the binary of “will they or won’t they issue” and says the Q4 update, when normalized for estimated pull forward of revenue and cash flow, implies SolarEdge’s underlying business is materially underperforming what’s embedded in fiscal 2025 and beyond estimates. As such, it views the share rally as overdone.